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Tuesday, November 30, 2010

Xcel halts biomass plant in Ashland

Xcel Energy Inc. on Monday halted plans to build a biomass power plant on Lake Superior in Ashland.

The utility holding company's Eau Claire-based utility informed the state Public Service Commission of its decision in a letter Monday.

Xcel had planned to build a biomass gasification plant that would have made the Ashland power plant the largest wood-burning power plant in the Midwest.

The decision came as a result of a significant increase in the cost of the project, as well as declining costs for other generation options. The utility also cited "considerable regulatory uncertainty at the state and federal level."

The announcement was made one day before the start of Public Service Commission hearings on a separate biomass power plant, proposed by Milwaukee-based We Energies to be built at the Domtar paper mill in Rothschild.

The timing of the announcement was coincidental and not linked to the We Energies proposal, said David Donovan, Xcel manager of regulatory policy.

"Although we are disappointed with the outcome, we have gained considerable value from the evaluation that we have completed," said Mike Swenson, president and chief executive of NSP-Wisconsin, a unit of Xcel Energy, in a statement.

"The engineering studies will advance gasifier technologies for utility applications and our efforts to procure sustainable biomass supplies have resulted in a model that can be adopted in future projects," Swenson said. "In addition, as part of this project we helped fund the development of two biomass energy plantations in northern Wisconsin, which will provide valuable research and study opportunities for decades to come."

Those plantations are testing the development of hybrid poplar and black willow trees for harvesting and burning at the power plant.